Pakistan unlikely to defy US on gas pipeline

Daily Times, April 17, 2005
Pakistan unlikely to defy US on gas pipeline

By Khalid Hasan

WASHINGTON: Pakistan is unlikely to defy the United States if the proposed mega gas pipeline project linking Iran, Pakistan and India is found to violate US law.

According to Salman Shah, adviser for finance to the prime minister, Pakistan would study the US law that triggers sanctions against any company that invests in or collaborates with Iranian oil and energy projects. US Secretary of State Condoleezza Rice expressed Washington’s opposition to the proposed tri-state gas pipeline project during her recent visit to South Asia.

In a briefing to journalists at the Pakistan embassy on Friday evening, Shah said if the pipeline violates any US law, “we’ll take a look at it.” He said there were several options that Pakistan could consider, besides the said pipeline. It was clear from the adviser’s carefully crafted answers to a volley of questions on this issue that Pakistan would not violate US law, or in other words, not become a party to the gas pipeline project were the US to take a strong position on the issue, something it appears to have already done. He said it was too early to state with finality what decision Pakistan would make. He said, for example, were the gas to be delivered to Pakistan at its borders, it might not involve any investment on Pakistan’s part. “We are looking at all possibilities,” he added. He said the Indian oil minister would visit Islamabad soon when this question was likely to come up for discussion.

Shah and State Bank Governor Ishrat Hussain are in Washington for the spring meetings of the World Bank and the International Monetary Fund. They also spoke earlier in the morning at a conference on education in Pakistan organised by the Woodrow Wilson Centre.

Speaking at the Woodrow Wilson Centre, Hussain said Pakistan had lost considerable earnings due to under-investment in education. He referred to a study that said Pakistan’s 1985 income would have been 25 percent higher if it had had Indonesia’s 1960 primary enrolment rate. Extending the projection to 2005 would show that Pakistan’s per capita income today would have been almost double of what it is and its record on poverty reduction much better. He said Pakistan had paid dearly for allowing the gender gap to persist. “Pakistan thus missed economic opportunities that have been exploited by many developing countries by increasing education levels for the bulk of their labour force,” he added.

Hussain pointed out that higher education in Pakistan has received a big boost in the allocation of financial resources and improvement in the quality of education. He quoted figures that, he argued, explode the popular Western myth that Pakistan’s education system is heavily populated by madrassas which are producing fundamentalists, extremists and terrorists for the rest of the world. Primary enrolment in madrassas, he added, accounts for only 0.9 percent of the total enrolment and there is differentiation among even those attending madrassas. A majority was not affiliated with any of the religious political parties or jihadi groups. In fact, these madrassas offer a balanced curriculum to their students.

Hussain said he would like to explain the phenomenon of higher incidence of unemployment coexisting with rapid growth in Pakistan. First, there was a serious mismatch between the jobs demanded by the emerging needs of the economy and the supply of skills and trained manpower in the country. The mismatch has created waste and misallocation of resources on the one hand and shortages of essential skills required to keep the economy moving on the other. Second, there is a “crisis of expectation” among the families and youth belonging to certain areas of the country which have enjoyed quota reservations in government jobs in the past. Third, the aggregate elasticity of employment with respect to Gross Domestic Product (GDP) was historically high because of the relative weight of agriculture. The share of agriculture in GDP has been declining. High unemployment rates under these conditions of productivity and efficiency gains are therefore not surprising. Fourth, there was much labour market segmentation in Pakistan, with Karachi being the exception that absorbs people from all parts of the country. The national labour market was less efficient that regional labour markets. Fifth, the archaic and outdated labour laws, levies and benefit payments imposed upon the formal sector of the economy create a wedge between the units costs borne by the employer and the actual wage received by the employees.

The State Bank governor said the future agenda for Pakistan would need to address the issue of greater focus on technical and vocational education, expansion of enrolment in higher education to at least 10 percent of the relevant age group, improvement of access, quality and governance of primary and secondary schooling, provision of incentives to encourage female enrolment in schools, reform of madrassa education, and restructuring of labour laws and regulations that discourage employment in the formal sector.